Investors from China announced European deals worth $32.6 billion (£25bn) last year, continuing to dominate foreign investment into the region.

Utilities are forecast to focus on renewable energy projects as they continue to transform portfolios, ramp up investment in electric vehicles (EVs) and boost investment in new technology, particularly battery storage, which is expected to gain momentum.

Miles Huq, EY Global Power & Utilities Transaction Advisory Leader said: “2018 was an outstanding year for Europe M&A deals driven by portfolio optimisation and interested foreign buyers. Looking forward, in 2019 it is expected that utilities will focus on renewable generation as they continue to transform portfolios.

“Investment in EVs will ramp up, particularly as the cap on vehicle emissions is implemented across the EU and investor interest in new technology, particularly grid-connected battery storage, will start to gain momentum.”

Global P&U transactions reached an all-time high last year, increasing 28% overall to $256.3 billion (£197bn) with a record volume of 546 deals.

Renewables continued to be a large driver, contributing 46% of total deal volume – 253 deals. However, despite making up almost half of all deals, renewables accounted for only 19% of total deal value – $48.3 billion (£37bn).

The US attracted the most capital investment of $81.4 billion (£62bn), including $55.1 billion (£42bn) of domestic transactions and $26.3 billion (£20bn) of inbound activity.